Upbeat Monti courts investors as unions prepare for battle over labour law reforms

ITALIAN PRIME minister Mario Monti yesterday struck an upbeat note when he suggested not only that his government would be able to enact radical labour reforms but also that US, Asian and other international investors were ready to reinvest in Italy.

Mr Monti was speaking in Tokyo, one of the stops on an Asian “road show” that has already taken him to Seoul and Beijing. One reason for the trip is to underline to international investors how, in his initial three months in office, he has managed to set the ailing Italian economy to rights. In other words, Italy again represents a safe bet for investment.

Whilst international observers have been clearly impressed by the manner in which the “technocrat” Monti government has hauled back the euro zone’s third largest and seemingly tottering economy from the “bond spread” abyss, fresh concern has been prompted in recent days by the possibility of widespread social unrest over labour law reforms. The leftist confederated union, CGIL, has already made it clear it will oppose the reform package with all the weapons at its disposal, including a possible general strike.

The problem about the intended reform is that it envisages a radical change to the terms and conditions of Article 18 of the labour code, a 40-year-old norm that has protected workers, especially from “unfair dismissal”.

Mr Monti, who claims he wants to make the labour market more flexible in hiring and firing, was making optimistic noises yesterday. “I get the impression that the majority of Italians see this labour reform as a necessary step that is in the interests of workers.”

On the plane to Seoul earlier in the week, the prime minister had seemed to suggest that if Italians were “not ready” for this controversial package, he might step aside. Yesterday, however, he was sounding much more determined. “Even if our ratings have gone down in recent days because of the labour reform, my government still enjoys a high approval rating, much higher than the main political parties back home . . . ”

The very existence of his non-elected technocrat government represented a strength rather than a weakness of the democratic system, Mr Monti said. Acknowledging there are those who would argue that such a government is “tangible proof” of the “instability and inadequacies” of Italian governance, he chose instead to praise the attitude of his predecessor, Silvio Berlusconi.

“There are not that many political systems where a prime minister who has not been clearly defeated in parliament will opt to step down . . . Furthermore, the parties, which until then had been been bitterly divided, then opted for a moment of national unity.”

Mr Berlusconi stepped down last November in the face of widespread domestic and international criticism of his handling of the economy, at a time when he was also embroiled in a series of judicial and sex scandal problems.

Mr Monti once again indicated that he did not intend to stay on in office beyond the spring of 2013, a date that represents the “natural” end of the current legislature. “We are and we should be only a brief exception . . . [when the parties return to power] things may be slightly different because they will have to take on board that people want proper governance, something which was perhaps lacking in the past.”

Lest he needed reminding of the difficulties ahead, they came yesterday from CGIL leader, Susanna Camusso, who repeated her union’s opposition to the labour reform package. “This is a country where 700,000 people in industry have lost their jobs in the last three years. The last thing we need is a measure that makes it easier to lay off more workers.”

The road ahead for the fledgling Monti government is about to rise steeply.